13. Circular No.61 dated December 14, 2002

Re: "Write-off" of unrealised export bills - Surrender of export incentives

This circular is in reference to Circular no 12 dated September 9, 2000 by which ADs have been permitted to allow "write-off" of unrealised export dues, and in reference to Circular no 30 dated April 4, 2001 in terms of which ADs have been granted powers to permit "write-off" annually upto 5% of average annual realization to status holder exporters subject to certain conditions.

RBI has through this circular has specified that ADs should obtain document/s evidencing surrender of export incentives availed of before permitting "write-off" for the relevant outstanding bills.

RBI has also specified that ADs are advised to put in place a system under which their internal inspectors or auditors (including external auditors appointed by ADs) should carry out random sample check/percentage check of "write-off" outstanding export bills.

14. Circular No.64 dated December 24, 2002

Re: Resident Foreign Currency (Domestic) Account - Facility for Resident Individuals

This Circular is in reference to Circular No 53 dated November 23,2002 and Notification No 74 dated November 1, 2002 in terms of which residents are permitted to open, hold and maintain, a Resident Foreign Currency (Domestic) Account out of foreign exchange acquired in the form of currency notes, bank notes, and travelers cheques for certain specified purposes.

RBI through this circular has notified that the Resident Foreign Currency (Domestic) Account may also be credited with / opened out of, foreign exchange earned and /or gifts received from close relatives (as defined in Companies Act) and repatriated to India through normal banking channels by resident individuals. Foreign exchange earnings could be through export of goods and /or services, royalty, honorarium etc.

15. Circular No.66 dated January 13, 2003

Re: Overseas Investments

This circular is in reference to Notification No 19 dated 3rd May 2000 wherein residents are not permitted to make investments in equity of companies registered overseas except by way of setting up joint ventures or wholly owned subsidiaries.

RBI has now permitted to invest abroad in companies (a) listed on a recognised stock exchange and (b) which has the shareholding of at least 10 % in an Indian company listed on a recognised stock exchange in India (as on 1st January of the year of the investment).

This permission has been given to Listed Indian companies, Resident individuals and Mutual Funds.

Listed Indian companies can make investments not exceeding 25 % of the Indian company's net worth as on the date of latest audited balance sheet. Resident Individuals are permitted to invest in overseas companies without any monetary limits.

Mutual funds are presently permitted to invest in ADR / GDR of the Indian companies and rated debt instruments, within an overall cap of USD 500 million. RBI has now permitted Mutual funds to invest in equity of overseas companies if the above mentioned two conditions are satisfied. It has also been decided to enhance the overall cap to USD 1 billion. Mutual funds desirous of availing of this facility may approach the Reserve Bank after obtaining the necessary permission from SEBI in the matter.

The Circular further specifies certain terms and conditions for making overseas investments abroad such as all transactions should be routed through a designated Authorised dealer and rupee payments received out of the bank account of the investor.

The Circular also specifies the other terms and conditions for Authorised dealers while permitting such overseas investments abroad.

16. Circular No.67 dated January 13, 2003

Re: Facilities to NRIs / PIOs and Foreign Nationals - Liberalisation

Presently, A.Ds are allowed to repatriate funds held by NRIs / PIOs in their NRO Accounts for Education upto USD 30,000 per academic year, Medical expenses upto USD 1,00,000, Sale Proceeds of Immovable property, held for a period of 10 Years, upto USD 1,00,000 per calendar year

Further A.Ds are presently permitted to allow remittance of assets of foreign nationals, including retired employees / widows of Indian citizens resident outside India and assets in India acquired by NRIs/PIOs by way of inheritance / legacy upto USD 1,00,000

RBI has through this circular notified the removal of the present dispensation of permitting different amounts for different purposes and also to enhance the overall limit to USD 1 million per year. Thus A.Ds are now allowed remittances upto USD 1 million, out of the balances held in NRO Accounts / Sale proceeds of assets, on production of an undertaking and certificate by a person making the remittance.

The circular further states that the above relaxations, subject to review, shall be effective for a period upto 30th June 2003 and the existing prohibition regarding repatriation of assets to a citizen of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan shall continue.

17 Circular No.68 dated January 13, 2003

Re: Acquisitions of Foreign Securities by Resident Individual under ESOP Scheme

Resident Individual, who is an employee or a director of an Indian office or branch of a foreign company or of a subsidiary in India of a foreign company or of an Indian company, is permitted to remit upto USD 20,000 in a calendar year for purchase of equity shares offered by the said foreign company under Employees Stock Option (ESOP) Scheme.

RBI through this circular has now notified the removal of the limit of USD 20,000 for purchase of foreign securities by resident individual. Accordingly now A.Ds may permit remittances for the acquisition of foreign securities under ESOP Scheme as per the terms of offer without any monetary limit. The other conditions that the shares under ESOP should be offered at the concessional price and the foreign equity holding in the Indian company should not be less than 51 %, has remained unchanged.

18. Circular No.70 dated January 13, 2003

Re: External Commercial Borrowings - Parking of Funds abroad

RBI has through this circular permitted corporates raising ECBs may retain the funds abroad in a bank account for their future forex requirements subject to the following: -
1. The debits in the account should be only for approved purposes for which the loan is raised.
2. The payment to the overseas suppliers, if any, shall be made against usual import documents including Bill of Lading / Airway Bill.
3. The deposit held abroad should not be utilised for any fund based or non-fund based facilities in India.
4. The account should be closed as soon as the forex requirements are met and any unspent balance should be repatriated to India immediately.

The circular also specifies that the details of the account (in soft copy form) should be submitted to the concerned Regional office of the RBI.

19. Circular No.71 dated January 13, 2003

Re: Acquisition of immovable property outside India

- Branches / trading offices overseas.

Presently in terms of Regulation 3 of Notification No 7 dated May 3,2000 permits a no person resident in India to acquire or transfer any immovable property outside India without general or special permission of Reserve Bank.

RBI has now through this circular permitted Indian corporates who have set up overseas offices to acquire immovable property outside India for their business as also staff residential purposes with prior permission of Reserve Bank

The format for making application for acquisition of immovable property overseas - Branches / trading offices is also enclosed along with this circular.

20 Circular No.73 dated January 24, 2003

Re: Foreign Exchange Management Act,1999 - Current Account Transactions - Use of International Credit Cards abroad

This circular is issued in reference to Notification No. G.S.R.33(E) dated 15th January, 2003.Accordingly, AD's are advised that the restrictions contained in Rule 5 of the Foreign Exchange Management ( Current Account Transactions) Rules, 2000, requiring prior approval of Reserve Bank, will not be applicable for use of ICCs by residents for making payments towards expenses, while on visit outside India, to the extent of the limit of the card. However, the restriction on the use of ICCs for purchase of prohibited items, like lottery tickets, banned or prescribed magazines in sweep-stakes, payment for call back services, etc. would continue.

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